Federal Financing of Higher Education Requires a National Dialogue

by Brett E. Lief

Reauthorization of the Higher Education Act (HEA) is due in 2013, at a time when federal spending in education will be subject to significant scrutiny and debate. The outcome of this debate may depend largely on whether we follow recent trends that have significantly altered the student aid programs, or return to the priorities originally conceived for them.

First, a Bit of History

When Bob Dylan recorded and released the song, “The Times They Are a-Changing” in 1964, he could not have known the enormous changes that would result just a year later from the enactment of the HEA of 1965, which became a centerpiece of President Lyndon Johnson’s “Great Society.” The Title IV federal student aid programs, which were based on the foundation laid by the GI Bill and introduced by the HEA, have enabled hundreds of millions of students to fulfill their educational dreams. The education received as a result of this support has led to immeasurable societal benefits and advances.

President Nixon later signed into law the HEA of 1972, which authorized the Basic Educational Opportunity Grant Program (now the Federal Pell Grant). Similar to the HEA, the Basic Grant would increase access to higher education for millions of students. In 1978, the Middle Income Student Assistance Act expanded programs to include new cohorts of needy students, and two years later the Parent Loans for Undergraduate Students (PLUS) program—which also targeted middle-income families— was enacted.

These 15 years established a federal foundation of support for access to postsecondary education and training. Under the leadership of dedicated individuals in the emerging profession of student financial aid administration, the combination of a federal foundation of student assistance programs, complimented by state scholarship and grant programs, provided the energy for decades of advancement.

The role of government is to stand behind students and not come between them and the school that they attend.

Change … But Not for the Better

Beginning in 1981 and now entering a third decade, the national commitment to postsecondary education and training is perhaps more aptly reflected in the 1977 Paul Simon song “Slip Slidin’ Away.” We have seen shifts in the guiding principles—which had been the cornerstone of the student aid programs—that are threatening student access to and choice in higher education. For example,

The introduction of fees paid by needy students for aid they receive, limiting access.

Changes in eligibility requirements that limit participation through non-financial program requirements (e.g., selective service and drug convictions).

The subsidization of student aid and other priorities resulting from student loan funds lent by the US Treasury at near zero interest rates but being repaid at 3.4 percent rates.

The transition to a model that provides a lower percentage of grant funds, and as a result, requires student loans to be used by students to simply access higher education, rather than to allow students choice in which institution they will attend.

In particular, the principle that the government not stand between students and schools has been discounted in recent years. Historically, schools have looked after their students in both academic and financial matters. However, through regulations, the government has begun positioning itself as an intermediary that lessens the relationship between students and schools. Many of the program integrity measures, new student aid disclosures, and new proposed metrics now try to define elements like “what is affordable” or “what constitutes a quality program.” Discretion is being taken away from schools through increasing numbers of regulations that dictate exactly how schools provide student aid. But beyond that, new and proposed regulations seek to impose price controls at schools and dictate curriculum development and delivery (e.g., the definition of a credit hour, state authorization, etc.).

All of these shifts have significantly altered the initial objectives of making aid available to the nation’s neediest students to expand college access and provide choice.

Reauthorization Is the Key

The process by which student aid is governed has played an important role in the negative trends witnessed recently in the federal student aid programs. Within the past 15 years, federal student aid programs have mostly been funded and regulated outside the reauthorizations of the HEA, through various budget processes and without the infusion of new funding.

The difference between reauthorization and a budget-based approach are stark. Reauthorization is a deliberate process set up by Congress to examine existing legislation for the express purpose of making policy changes that are in accordance with the philosophical purpose of the law. Reauthorization generally consists of several congressional hearings over many months with subject matter experts and researchers. Historically, higher education reauthorizations have also been accompanied by bipartisan compromises.

Conversely, the budget and appropriations process is an annual process that is meant to provide funding for federal programs. Significant legislative changes made through the budget process are often rushed and done without the public debate and thoughtful feedback from experts. Changes made through the budget process are also usually wrapped up in very large omnibus spending bills (several bills collapsed into one large bill), which means drastic changes may be made to student aid programs without the same litmus tests and scrutiny that are used during reauthorization. This results in legislative changes that are more likely to have unintended consequences, lack bipartisan support, and occur without input from voices that are vital to the process.

The trend toward altering the programs through the budget process has taken on a life of its own, as both the president and Congress have recently proposed substantial changes to eligibility and program features, which may include the elimination of some programs. Even the most ardent supporters of college access agree that the foundation of the federal student assistance programs needs to be updated to reflect changes that have occurred since 1965. But there is also universal agreement that this should not occur through budget processes.

Regardless of the outcome of the November 2012 elections, there will be a national commitment to reduce federal expenditures and the national debt. At the same time, there will be an emphasis on building a strong economy that provides employment opportunities for those who have received education and training with the help of taxpayer-funded federal student aid programs.

As in 1965, the future of federal financing for postsecondary education and training requires a national dialogue supported by student- and school-based services that go beyond compliance. This can be achieved through the upcoming reauthorization of the HEA, a legislative process that must be restored to its former prominence.

Brett E Lief, is a board member for the National Student Loan Program (NSLP), a not-for-profit organization that provides student and school services, including financial education, repayment solutions and financial aid administration. Prior to joining NSLP, Brett was president of the National Council of Higher Education Loan Programs. He began his career in student aid in the public and independent college sectors, followed by senior financial aid positions for the State of New Jersey.

The opinions offered and statements made in Student Aid Perspectives articles do not imply endorsement by NASFAA or guarantee the accuracy of information presented.

Publication Date: 4/25/2012

Adabel F |
5/8/2012 12:10:56 AM

I will say that I found this article enlightening and informative. This article makes me reflect on two things: the many years of which I benefited from financial aid programs and the many more years as a Financial Aid Counselor. I agree with the Lief in the sense that there is a stark difference at the receiving end of reauthorization and the budget-based process. As a “starving” student, I counted on these federal programs early on to help me achieve my higher education. Times for me as a student were different then, college was affordable and so were books. The budget-based process this past decade as Lief points out has taken a life of its own. It changes the dynamics of what it means to assist those who want access to higher education. As fees continue to increase so does the cost of living and as a response the legislature makes significant changes to Direct Loans, cuts to Pell and other programs. As a Financial Aid Counselor, I have heard a significant outcry from students who have been caught up in this process with no help in sight and none to give.

Melissa S |
5/1/2012 11:47:14 AM

Thank you. As I have been in financial aid only 6 years, I learned a great deal from this article!

Comments Disclaimer: NASFAA welcomes and encourages readers to comment and engage in respectful conversation about the content posted here. We value thoughtful, polite, and concise comments that reflect a variety of views. Comments are not moderated by NASFAA but are reviewed periodically by staff. Users should not expect real-time responses from NASFAA. To learn more, please view NASFAA’s complete Comments Policy.